Filing deadlines, who must file, what goes in a T2, how to pay, and penalties for late filing
Every incorporated company in Canada must file a T2 Corporation Income Tax Return every year — even if the corporation had zero income or was inactive. Missing the deadline triggers automatic CRA penalties. This guide covers everything an incorporated small business owner needs to know about T2 filing.
Every corporation that was a resident of Canada at any time during the tax year must file a T2. This includes:
Zero income does not mean no filing requirement. A dormant holding company must still file a T2 every year. CRA assesses a late-filing penalty even on a nil return.
The T2 filing deadline is 6 months after the end of the corporation's fiscal year.
| Fiscal Year End | T2 Filing Deadline | Tax Payment Deadline |
|---|---|---|
| December 31, 2025 | June 30, 2026 | March 31, 2026 (CCPCs) |
| March 31, 2026 | September 30, 2026 | June 30, 2026 (CCPCs) |
| June 30, 2026 | December 31, 2026 | September 30, 2026 (CCPCs) |
| September 30, 2026 | March 31, 2027 | December 31, 2026 (CCPCs) |
Tax payment is due before the return is due. CCPCs that owe $3,000 or less in federal/provincial tax have 3 months after fiscal year-end to pay. CCPCs owing more than $3,000 must pay within 3 months. Public corporations have 2 months. Late payment attracts interest at CRA's prescribed rate.
The late-filing penalty for T2 returns is:
For a second offence within 3 years, the penalties double: 10% + 2% per month up to 20 months.
Even if the corporation owes no tax, CRA can still assess a flat late-filing penalty for chronic late filers. File on time — even a nil return.
The T2 is a complex return with multiple schedules. Key components include:
| Schedule | What It Covers |
|---|---|
| T2 Core Return | Net income, taxable income, tax payable calculation |
| Schedule 1 | Reconciliation from accounting income to tax income |
| Schedule 8 | Capital Cost Allowance (CCA) — depreciation for tax purposes |
| Schedule 50 | Shareholder information — names, SINs, percentage ownership |
| Schedule 100 | Balance sheet — assets, liabilities, equity |
| Schedule 125 | Income statement — revenues and expenses |
| Schedule 200 (CCPC only) | Small Business Deduction claim |
| Schedule 500 (Ontario) | Ontario corporate tax calculation |
Since 2016, most corporations are required to file their T2 electronically using CRA-certified tax software. Paper filing is only permitted for corporations with gross revenue under $1 million that choose not to file online (and a paper-filing surcharge applies).
Popular options used by accountants and small business owners:
Unlike personal T1 returns, most T2 software is designed for accountants and is not marketed directly to business owners. Most incorporated small businesses hire a CPA to prepare and file their T2.
| Income Type | Federal Rate | Combined Rate (Ontario example) |
|---|---|---|
| Active business income (CCPC, first $500K) | 9% | ~12.2% |
| Active business income above $500K | 15% | ~26.5% |
| Investment/passive income (CCPC) | 38.67% | ~50.17% |
| Capital gains (CCPC) | 19.33% | ~25.08% |
If your corporation owes more than $3,000 in combined federal and provincial tax, you must make monthly installment payments during the year. The installment amount is based on:
Missing installments does not trigger a penalty, but CRA charges interest on any shortfall at the prescribed rate (currently 8–9%).
To prepare your T2, your accountant typically needs:
Get organized early. Most CPA firms get extremely busy from February to June. Send your year-end package to your accountant within 30–60 days of your fiscal year-end to avoid missing your filing deadline.
Smart Canada Tax connects you with qualified Canadian tax professionals who handle corporate returns for small businesses and CCPCs.
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